3332-1-13
Surety Bonds.

(A)
Pursuant to
section 3332.08 of the Revised Code, the
application for a certificate of registration shall be accompanied by a surety
bond in the penal sum as determined by section (E) of this rule. The bond shall
be in a form prescribed by the state board of career colleges and schools with
at least one corporate bonding company approved by the department of insurance
as surety thereon. Bond shall be maintained in effect for a period as
determined by section (F) of this rule. The bond shall provide for
indemnification of any person suffering prepaid tuition loss as the result of a
school closure, program termination or other acts or omissions resulting in the
cancellation, revocation, or expiration of a certificate of registration or
program authorization.

(B)
The
liability of the surety on the bond shall not exceed the sum of the face value
of the bond as determined by the board as an aggregate for all students for all
breaches of the conditions of the bond by the school. The term of the bond
shall be continuous, but it shall be subject to cancellation by the surety in
the manner described in this rule.

(C)
The surety may terminate the bond upon
giving a sixty-day written notice to the principal and to the state board of
career colleges and schools, but the liability of the surety for the acts of
the principal continues during the sixty days of the cancellation notice. The
notice does not absolve the surety from liability which accrues before the
cancellation becomes final, but which is discovered after that date and which
may have arisen at any time during the term of the bond. Unless the bond is
replaced by that of another surety before the expiration of the sixty days
notice of cancellation, the school's certificate of registration shall be
suspended.

(D)
Any person subject
to this section required to file a bond with an application for a certificate
of registration, may file, in lieu thereof, cash, a certificate of deposit, or
government bonds in the amount of the face value of the bond as determined by
the board. The deposit is subject to the same terms and conditions as are
provided for in the surety bond required herein. Any interest or earnings on
such deposits are payable to the depositor.

(1)
The minimum penal sum of any bond
maintained by a registered school under this rule shall be ten thousand
dollars.

(2)
A registered school
will be required to maintain a bond with a penal sum in excess of ten thousand
dollars if it meets any of the following conditions:

(a)
The school fails to meet the board's
standards of fiscal responsibility.

(b)
The school maintains over one hundred
thousand dollars in prepaid tuition revenue as calculated by the board and
excluding prepaid tuition revenue that consists of government grants or federal
student loans and grants authorized under Title IV of the "Higher Education Act
of 1965," 20
U.S.C. 1070 et seq., as amended.

(3)
A school that fails to meet
the board's standards of fiscal responsibility shall be required to maintain a
bond in a penal sum equal to fifty percent of the school's prepaid tuition
revenue as calculated by the board.

(4)
A school that maintains over one hundred
thousand dollars in prepaid tuition revenue as calculated by the board and
excluding prepaid tuition revenue that consists of government grants or federal
student loans and grants authorized under Title IV of the "Higher Education Act
of 1965," 20
U.S.C. 1070 et seq., as amended, shall be
required to maintain a bond in the penal sum of ten thousand dollars plus fifty
percent of the school's prepaid tuition revenue that exceeds one hundred
thousand dollars as calculated by board.

(1)
New schools registered with the board and
the schools changing ownership on or after the effective date of this rule
shall be required to maintain a bond for a minimum period of five years. After
five years, a school may request that it permitted to cancel its bond. The
board may allow any school that falls within the minimum bonding requirement of
ten thousand dollars to cancel its bond if the school has demonstrated that it
meets the board's standards of fiscal responsibility.

(2)
Schools currently registered with the
board on the effective date of this rule that were required by the board to
maintain a bond prior to the effective date of this rule, shall be required to
obtain a bond meeting the conditions of this rule within sixty days of the
effective date of this rule.

(3)
Schools holding a certificate of registration that were not required by the
board to maintain a bond prior to the effective date of this rule, will not be
required to maintain a bond under the provisions of this rule unless the school
falls within the provisions of section (E)(2) of this rule.

(G)
Letters of credit,
certificates of deposit, government bonds or cash deposited with the board in
lieu of a surety bond are subject to the same conditions as are provided for in
the surety bond required by this rule. Each letter of credit, certificate of
deposit, government bond or cash shall be filed in accordance with the forms
and instructions provided by the board.